The epicentre of the quake, first reported as 7.7-magnitude, was near the town of Rabaul in Papua New Guinea, 787 kilometres north-east of the capital, Port Moresby, the US Geological Survey (USGS) said. Its depth was revised from 65 kilometres to 40 kilometres.

Edward Leask, a duty seismologist at Geoscience Australia, said the main earthquake struck at 10.48am Sydney time, and there was no tsunami threat to Australia.

He said the undersea earthquake was "quite strong" and was believed to be one of the most powerful recorded in the world this year.

However, it was considerably less powerful than the 9.1 quake that caused the Boxing Day tsunami in 2004.

"Obviously, this is on a much smaller scale [than the Boxing Day earthquake], so there's a bit less energy, which is why we're not worried for Australia. We don't feel that there is going to be much threat from that area, and we've got the Great Barrier Reef in the way as well to help slow it down," he said.

He said several aftershocks appeared to have occurred in the same area shortly after the main earthquake.

The US Geological Survey reported that a 5.7-magnitude earthquake struck at 11.15am, Sydney time, 91 kilometres south-south-west of Taron in Papua New Guinea.

The Pacific Tsunami Warning Centre has warned that tsunami waves reaching one to three metres above the tide level could hit the Papua New Guinea coast.

However, Mr Leask said it was not yet clear whether a tsunami wave had been generated.

If a tsunami wave did form, it was hard to predict what damage it could cause.

"Tsunamis are such tricky beasts," he said.

"There's a lot of energy; the water can go through two beaches right next to each other, and they can have a completely different response as to how the water comes and hits them. Potentially, there could be some problems for the locals."

The cities most exposed to the quake are Kokopo (population 26,000) and Rabaul (8000).

The Pacific Tsunami Warning Centre in Hawaii issued a warning for Papua New Guinea and the Solomon Islands.

It said "hazardous tsunami waves are possible for coasts located within 1000 kilometres of the earthquake epicentre along the coasts of Papua New Guinea and the Solomon Islands".

No destructive, Pacific-wide tsunami was expected, it said.

"We felt the earthquake for five minutes. This is the strongest, the most recent one," said Mika Tuva, a payroll officer at the Rabaul Hotel, which wasn't damaged.

"We thought it was going to be the volcano erupting again," she said by phone, referring to a 1994 eruption that caused Rabaul, the former provincial capital, to be evacuated.

Workers at the hotel, which is in a low-lying area of the town 30 kilometres north-west of Kokopo, called the country's tsunami observatory and were waiting for word on whether to take further action.

There was no sign of damage from the earthquake at Rabaul Airport and flights were landing as scheduled, Joe Tamlik, a safety officer, said by telephone.

Local radio may have been knocked out by the quake, he said.

"We are still on the ground performing our duties," Mr Tamlik said.

Tsunami waves as high as three metres above the tide level were possible along some parts of Papua New Guinea, the warning centre said.

Australia's warning centre said there was no threat of a tsunami from the quake.

Last night, an undersea earthquake measuring 5.9-magnitude struck the Moluccas in Indonesia, the US Geological Survey said.

The quake, only 10 kilometres deep, was 128 kilometress north-west of Ternate in the Moluccas.

with Jane Wardell, Edward Johnson, Reuters, Bloomberg